By Andrew L. Jaffee

A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts. …

- Associated Press, 12/11/08

The Big Three U.S. automakers, Chrysler, Ford, and GM, now “teeter on collapse,” as both their management and labor long ago willfully missed all opportunities for making the systemic changes necessary to remain competitive with foreign rivals. Now, the Big Three’s only chance for survival, and their workers’ only hope for staying employed, is entirely dependent on a hand-out from Washington. Despite the glaring red warning lights — the massive writing on the wall (”doom”) — it seems that the United Auto Workers (UAW) are so intransigent that they would rather lose their jobs than cooperate with lawmakers and make some long-overdue wage concessions.

Before Congress passes any bailout legislation for the automakers, it very rightfully wants to see both the Big Three and their workers agree to some concessions, so that taxpayer money doesn’t end up wasted, going down the toilet. Some compromise on the part of labor and management is absolutely necessary so that the bailout money will have a better chance of being used by the automakers to help restructure their business and labor practices. The taxpayer money should only be used to implement procedures that: 1) encourage automakers to produce high-quality products and services; 2) assist the Big Three in becoming attentive to consumer preferences (e.g, producing fuel-efficient cars); and, 3) aid our auto industry in becoming competitive once again with the likes of Honda, Subaru, and Daimler.

The concessions some in Congress are demanding from the UAW are quite reasonable. According to the Associated Press:

… The collapse [of prospects for passing bailout legislation] came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers. …

Let us put the phrase “steep wage cuts” into a reality-based context. Organized labor, like the UAW, have previously made contractual pay concessions to the automakers, but U.S. auto worker pay is still excessive and much higher than what Japanese auto workers earn. So says Dr. Mark J. Perry, “a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.” He put together a compelling chart which compares U.S. auto worker compensation to that of their Japanese counterparts, which he backs up with raw data from his research:

Chart courtesy of CARPE DIEM, Professor Mark J. Perry’s Blog for Economics and Finance

Now hold on just a minute. Toyota employee compensation averages $48.00/hour while the mean pay package per hour for a Big Three employee is $73.20. For producing low-quality, gas-guzzling cars, American auto workers get paid 52% more than Japanese workers? That’s not reality; that’s a greedy fantasy-land.

Japan ranks 8^th in the world for “quality of life.” The Japanese enjoy the world’s 5^th largest “GDP (purchasing power parity).” Would it be so much to ask American auto workers to enjoy the same living standard which the Japanese savor? I think not.

When I was a child, I watched the employees of National Cash Register (NCR) strike for years — until NCR just moved its manufacturing jobs out of town. The only thing that hundreds of NCR striking workers got from their uncompromising attitude was lost jobs.

The same fate awaits UAW workers if they insist on clinging to benefit-packages which are unaffordable in today’s very competitive world business landscape.

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Related: Economy, Japan, Law, Pure Politics, Society, United States

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